The process of setting up a business or expanding a business is cumbersome as it involves a lot of paperwork. Businesses need to obtain a lot of permits and licenses in order hire employees and start the operations. Obtaining the EIN number is also one of the primary tasks required for starting a business.
EIN number of the employer ID number is a unique nine-digit number given by the IRS. It helps the department to identify a particular business for taxation purposes. All the businesses that plan to hire employees and are liable to pay taxes are required to get the EIN or federal tax ID number.
The employer ID number is required for all types of business organizations like, partnerships, LLCs, trusts, Estates, church and other religious entities, not-for-profit organizations and all type of C and S Corporations. The only business that does not require an EIN is sole proprietorship ship with no employees and does not has business with the above mentioned entities.
Here is a list of conditions that makes it mandatory obtain an EIN number from the IRS
- Having employees working in the United States
- You offer Keogh pension plan for employees
- Your business is liable to pay taxes like sales tax, excise and alcohol tax, tobacco or firearms tax and employment taxes
- You withhold taxes on income paid to a non-resident
- Involving in the administration of trusts, estates, real estate mortgage, not-for-profit organizations, farmers co-operatives and income tax returns.
Businesses need to furnish their employer ID number for the purpose of opening checking accounts with banks, obtaining business credit card, obtaining line of credit from banks and financial institutions, applying for other licenses and permits from government departments and hiring employees.
The process of filing for employer ID is easy and free. It can be done easily on the website of IRS. However, it is necessary to keep the following information handy before starting the application process.
- Registered name and physical address of the company
- Name of the responsible party and the social security number
- Type of organization of the business
- Field of business
- Purpose of applying for EIN
- Email and telephone numbers of the business
You will receive the employer ID number immediately after furnishing the correct details and completing the registration process. The number can be used for all other purposes except for filing taxes, as businesses have to wait for two weeks for the number to get permanently registered with IRS to pay their taxes.